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Twitter Beats - Revenue Rises 74%

July 23, 2021

Twitter reported financial results for its second quarter 2021. The social media player had earnings: 20 cents per share, adjusted with only 7 cents expected. On the revenue line, the firm took in $1.19 billion with only. $1.07 billion expected. Twiiters' Monetizable daily active users (mDAUs) were 206 million vs. 206.2 million which was sought by investors.

"As we enter the second half of 2021, we are shipping more, learning faster, and hiring remarkable talent," said Jack Dorsey, Twitter's CEO. "For example, our increased shipping cadence contributed to reaching 206 million average monetizable DAU (mDAU) in Q2, up 11% year over year and 3% quarter over quarter. There's a tremendous opportunity to get the whole world to use Twitter."

"We delivered better-than-expected performance across all major products and geographies while growing our audience," said Ned Segal, Twitter's CFO. "We continued to make significant progress on our direct response and brand products with updated ad formats, improved measurement, and better prediction. We are driving more value for advertisers with our strong push into performance-based advertising and expanded offerings for small and medium-sized businesses."

Second Quarter 2021 Operational and Financial Highlights 

Except as otherwise stated, all financial results discussed below are presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. As supplemental information, we have provided certain non-GAAP financial measures in this press release's supplemental tables, and such supplemental tables include a reconciliation of these non-GAAP measures to our GAAP results. The sum of individual metrics may not always equal total amounts indicated due to rounding.

  • Q2 revenue totaled $1.19 billion, an increase of 74% year over year.
    • Advertising revenue totaled $1.05 billion, an increase of 87% year over year, or 85% on a constant currency basis.
      • Total ad engagements increased 32% year over year.
      • Cost per engagement (CPE) increased 42% year over year.
    • Data licensing and other revenue totaled $137 million, an increase of 13% year over year.
    • US revenue totaled $653 million, an increase of 79% year over year.
    • International revenue totaled $537 million, an increase of 69% year over year, or 64% on a constant currency basis.
  • Q2 costs and expenses totaled $1.16 billion, an increase of 21% year over year. This resulted in operating income of $30 million and 3% operating margin, compared to an operating loss of $274 million, or -40% operating margin for the same period in 2020.  The year ago period includes a non-recurring expense of $150 million related to an ongoing FTC matter. 
  • Stock-based compensation (SBC) expense grew 34% year over year to $178 million and was approximately 15% of total revenue.
  • Q2 net income was $66 million, representing a net margin of 6% and diluted EPS of $0.08. This compares to a net loss of $1.38 billion, a net margin of -202%, and diluted EPS of ($1.75) in the same period of the previous year. Excluding the impact of the income tax expense due to the establishment of a valuation allowance driven primarily by COVID-19, Q2 2020 adjusted net loss was $277 million, representing an adjusted net margin of -40% and adjusted diluted EPS of ($0.35).
  • Net cash provided by operating activities in the quarter was $382 million, compared to $201 million in the same period last year. Capital expenditures totaled $276 million, compared to $162 million in the same period last year, driven by infrastructure investments in data center build-outs to support audience growth and product innovation.
  • Average monetizable daily active users (mDAU) were 206 million for Q2, compared to 186 million in the same period of the previous year and compared to 199 million in the previous quarter.
    • Average US mDAU were 37 million for Q2, compared to 36 million in the same period of the previous year and 38 million in the previous quarter.
    • Average international mDAU were 169 million for Q2, compared to 150 million in the same period of the previous year and 162 million in the previous quarter.

Outlook 

Given our execution and confidence in our strategy as we enter the second half of the year, we're updating our outlook for expense growth and revenue. We now expect headcount, along with total costs and expenses, to grow 30% or more for the full year of 2021 with a focus on engineering and product. As you'd expect, incremental headcount investments in 2021 will flow into our annual expense base in 2022. We continue to expect total revenue to grow faster than expenses in 2021 assuming the global pandemic continues to improve and that we continue to see modest impact from the rollout of changes associated with iOS 14.5. How much faster will depend on various factors, including our execution on our direct response roadmap and macroeconomic factors.

For Q3'21:

  • Total revenue is expected to be between $1.22 billion and $1.3 billion.
  • GAAP operating income is expected to be between a loss of $50 million and break even.

For FY21:

  • Stock-based compensation expense is expected to be approximately $600 million.
  • Capital expenditures are expected to be between $900 million and $950 million.

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